Hello,

I'm an American ExPat, and have been teaching English in Taiwan since 2008.

This is the situation for foreign English teachers working in buxibans (the vast majority):

YEAR 1

1) If you arrive before July 2nd, you will pay 20% tax for the first 182 days you work, then the rate drops to 13% for the remainder of the first year. When you file your taxes the following year you can get the additional 7% paid at the beginning of the year refunded.

2) If you arrive after July 2nd, you will pay a flat 20% for the remainder of the year, and will not get a refund.

YEAR 2 AND BEYOND

For each full year that you work in Taiwan, the first 183 days are taxed at 20%, then the rate drops to 13% for the last 182 days. You can get a refund of the additional 7% paid the first half of the year when you file your taxes the following year.

The tax situation may be different for teachers in public schools. Note, however, that only those with teaching credentials from their home county may teach in public schools.

Whether or not you're married to a Taiwanese doesn't affect your tax rate. You're still a non-Taiwanese, and so you'll pay the above rates.

Hope this helps.

Stephen

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Hi Stephen, thanks a lot for the help! I am a bit confused on who gets these taxes. In your explanation, do you pay taxes to Taiwan AND USA? Or is it just for Taiwan? If it is just Taiwan, do I pay anything to USA?

I am in the process of finishing up my credentials now, so that is almost a go!

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00abuse

Hi,

The tax percentages I quoted above will be withheld from your pay by your Taiwan employer, who will remit it to the Taiwanese government, just like it works in the US.

When you file your Taiwan tax return (in May of the following year) you can get a refund of the excessive amount withheld during the first six months of that year.

So, let's say you were in Taiwan all of 2012. From Jan. to June your employer would withhold 20% taxes from your pay. Then from July to Dec. your employer would withhold 13% (the 'normal' rate).

Then, in May of 2013 you'd file your 2012 tax return and receive a refund of the excess 7%. The refund won't come, though, until probably October of 2013.

The first year you arrive, which is usually a partial year, is the tricky one.

Let's say you arrive during the first 182 days of the year, and you begin working on April 1, 2012. Your employer would withhold 20% taxes from April 1 to Sept. 30 (182 days). Then s/he'd withhold 13% taxes from Oct. 1 to Dec. 31. In May of 2013 you file your taxes and get a refund of the excess 7%.

If, however, you arrive in Taiwan after the 182nd day of the year (around July 2), then you'd be taxed at 20% for the remainder of the year, and not get a refund. Sucks, I know.

You are still required to file US income tax returns each year, but you don't have to pay US taxes on foreign income if the amount you earn is less than US$91,500.

Good luck on completing your degree. Feel free to ask any other questions you may have.

Stephen

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00abuse

Hi Steven,
Thanks for the info on taxes. This is very important for me to understand so I can negotiate the right amount to account for the additional taxes.

Did I read correctly that if the income is less than $91.5K, then you don't have to pay any tax in the U.S? What if you make more than $91.5K (said $100K), would the U.S tax be on the $8.5K or on the entire income?

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00abuse

I'm not a tax attorney or anything, so don't take my word as gospel :-)

Anyway, the $91.5K is worded as an "income exemption." I think that means that you'd only be taxed on the amount over that figure.

You might want to take a look at IRS form 2555 or 2555EZ for more information.

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Choosing an expat health insurance provider is an important decision. Get a quote from our trusted expat health insurance partner, CIGNA. With Cigna Global Health Options, you can create an international health insurance plan that's perfectly tailored for the needs of you and your family.

I just wanted to add...

The 13% "normal" tax rate I quoted above applies to most buxiban teachers, who generally earn less than NT$1,000,000 (US$33,000) per year.

The 13% tax rate increases for higher incomes, but I don't really know the percentages.

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